75: Sin Tax Scandal? The Hidden Underbelly of these Buzzy Excise Taxes

12/14/21 • 30 min

We all think we understand sin taxes, but do we really? Sin taxes are typically excise taxes that target behaviors that we want to discourage. Common examples include taxes on booze, sugar, and cigarettes.

Do we legalize certain activities and substances just so we can tax them? What’s the intention behind sin taxes, and are they really working as intended?

On today’s episode of the Taxgirl podcast, Kelly is joined by Thomas Shohfi to chat about the nuances of sin taxes. Thomas is an assistant professor in the Lally School of Management at Rensselaer Polytechnic Institute. He recently conducted a study on sin taxes with some surprising results.

Listen to Kelly and Thomas talk about the consequences of sin taxes:

What are the details of Thomas’s research on sin taxes, and what were some of the interesting highlights that came from the study? The study focuses on New York City taxi drivers, and under which circumstances they add certain rates to their fares.
When it comes to cigarettes, how might the difference in taxation on a single pack vary from state to state, and how can that alter a smoker’s behavior? What are the governmental implications and social consequences of this particular sin tax?
Thomas speculates that there are many unintended consequences and “third party effects” that stem from sin taxes, and that much more research into the subject is needed. For addiction-related issues in particular, such as gambling and cigarettes, there are many potential disruptions and unseen consequences that may come from long term implementation of sin taxes. Does making the cost of gambling higher actually help a gambling addict to get help? Does increasing the cost of a pack of cigarettes really dissuade a lifelong smoker?
What about marijuana? Many sin taxes are placed on substances and activities that are currently legal today, that didn’t used to be (such as booze). We legalize it, we tax it. But what is the right amount of taxation? Is it a paradox to legalize a substance, only to slap on a tax meant to discourage the use of that substance?
Governments can easily put together calculated projections for taxes based on sales of particular goods. But long term research and statistics on sin taxes can become far more complex. How does Thomas suggest researchers pitch these studies, and how might they be organized or funded in the future?
How might the existence of sin taxes affect people’s opinions on the activities and substances themselves? What do people think about people who partake in those behaviors, what do people think about a government that classifies certain things as taxable “sins,” and how do they draw ideological lines in the political sands?
What behaviors does Thomas think may be taxed in the future? Kelly and Thomas discuss sex work, on OnlyFans in particular, and what a sin tax on the platform might look like.

More about Kelly:

Kelly is the creator and host of the Taxgirl podcast series. Kelly is a practicing tax attorney with considerable experience and knowledge. She works with taxpayers like you every day. One of the things that she does is help folks out of tax jams, and hopefully, keep others from getting into them.

You can find out more about Kelly here and you can follow her on Twitter, Facebook, Instagram, and Linkedin.

To subscribe to the podcast (it's free!) using Apple, Spotify, or your favorite listening app, click here.

Links:

Kelly’s Website – Taxgirl

Thomas’ Website – Shohfi.com

Thomas’ Papers – Papers

Thomas’ Sin Tax Piece – Do Sin Tax Hikes Spur Cheating in Interpersonal Exchange?

Roger White’s Papers – Papers

Do we legalize certain activities and substances just so we can tax them? What’s the intention behind sin taxes, and are they really working as intended?

Listen to Kelly and Thomas talk about the consequences of sin taxes:

What are the details of Thomas’s research on sin taxes, and what were some of the interesting highlights that came from the study? The study focuses on New York City taxi drivers, and under which circumstances they add certain rates to their fares.
When it comes to cigarettes, how might the difference in taxation on a single pack vary from state to state, and how can that alter a smoker’s behavior? What are the governmental implications and social consequences of this particular sin tax?
Thomas speculates that there are many unintended consequences and “third party effects” that stem from sin taxes, and that much more research into the subject is needed. For addiction-related issues in particular, such as gambling and cigarettes, there are many potential disruptions and unseen consequences that may come from long term implementation of sin taxes. Does making the cost of gambling higher actually help a gambling addict to get help? Does increasing the cost of a pack of cigarettes really dissuade a lifelong smoker?
What about marijuana? Many sin taxes are placed on substances and activities that are currently legal today, that didn’t used to be (such as booze). We legalize it, we tax it. But what is the right amount of taxation? Is it a paradox to legalize a substance, only to slap on a tax meant to discourage the use of that substance?
Governments can easily put together calculated projections for taxes based on sales of particular goods. But long term research and statistics on sin taxes can become far more complex. How does Thomas suggest researchers pitch these studies, and how might they be organized or funded in the future?
How might the existence of sin taxes affect people’s opinions on the activities and substances themselves? What do people think about people who partake in those behaviors, what do people think about a government that classifies certain things as taxable “sins,” and how do they draw ideological lines in the political sands?
What behaviors does Thomas think may be taxed in the future? Kelly and Thomas discuss sex work, on OnlyFans in particular, and what a sin tax on the platform might look like.

More about Kelly:

You can find out more about Kelly here and you can follow her on Twitter, Facebook, Instagram, and Linkedin.

To subscribe to the podcast (it's free!) using Apple, Spotify, or your favorite listening app, click here.

Links:

Kelly’s Website – Taxgirl

Thomas’ Website – Shohfi.com

Thomas’ Papers – Papers

Thomas’ Sin Tax Piece – Do Sin Tax Hikes Spur Cheating in Interpersonal Exchange?

Roger White’s Papers – Papers

Previous Episode

74: Working Moms & Parents Finding New Support Systems Post-Pandemic

Almost 1.5 million fewer moms of school age children were actively working in March 2021 compared to February 2020. The pandemic has certainly taken its toll on working parents.

Kelly loves all things tax. She’s an attorney, and she’s a mom. She strongly believes it’s important for her kids to see her working, and for them to know that their mom loves what she does. Kelly says that being a working parent has made her a better tax attorney: from planning, keeping organized, multitasking, and cultivating an abundance of patience and empathy.

Professional networking groups like All Before Dinner can be a great resource and support network for working parents.

On today’s episode of the Taxgirl podcast, Kelly is joined by Lisa Jerles and Mara Geronemus to chat about pursuing a successful, fulfilling career while also being a mom. Lisa and Mara are the founders of All Before Dinner, a professional networking group for working moms. They are both attorneys and mothers, and describe the group in terms of changing the narrative around motherhood, which is often seen as a liability rather than an asset. The group focuses on business development, and personal and professional growth for working moms across a variety of industries.

Lisa is a commercial litigator at Kluger, Kaplan, Silverman, Katzen & Levine, where she focuses on complex business disputes and litigation strategy. Mara is a corporate attorney and the founder of Geronemus Law.

Listen to Kelly and Lisa talk about professional networking as a working mom:

What seem to be the trends for working parents returning to work right now, by the numbers between men and women? Are women and moms not returning to work to the same degree as men and dads?
As kids get older, their interests and activities become more complex and demanding, and as parents it becomes more difficult to plan accordingly. The idea of childcare can seem one dimensional, but there are really so many facets to it that will vary for every family. How can working parents manage their time between work commitments and family commitments?
One of Kelly’s pet peeves with some working parents is how they’ll talk about their lives without ever alluding to or admitting to assistance with childcare. It’s important to set an example for younger professional parents that it’s okay to have help, and it’s great to have a support system like a networking group as well.
All Before Dinner was started a few months before the pandemic hit. What impact did the pandemic have on their group, and what do they think draws a working mom to join the group? Lisa and Mara say “interest exploded in 2020.”
Kelly says parenting still falls a lot on the moms, whether we like to think about it that way or not. She says in her experience, schools will always call her cell phone first, even if calling her husband would have been much more convenient for their family. How does this bias impact moms’ professional lives?
No matter the profession, there are times when a working parent can predict their availability better than other times. Networking groups can help working parents feel solidarity during the busy times and the unpredictable times.
Kelly shares an anecdote about when she had to take her baby to a networking event and was terrified she’d get a lecture about it, but that everything turned out just fine. What contributes to the negative stigma toward working mothers, and how can the stigma continue to be broken down?
A lot of working parents operate outside of standard working hours. To what extent is this a healthy practice, and how easily can it become all-consuming? From email scheduling to attending Zoom meetings from the carpool line, Lisa and Mara share their tips for balancing work and family.
What is the long term plan for All Before Dinner? Lisa and Mara say they will continue to meet virtually, and hope to integrate in-person events very soon as well.

More about Kelly:

You can find out more about Kelly here and you can follow her on Twitter, Facebook, Instagram, and Linkedin.

To subscribe to ...

Next Episode

76: Busting Financial Crime via Increased Transparency after Panama Papers

In response to the Panama Papers scandal, the EU agreed to regulations mandating the publication of beneficial ownership registries. It should follow, then, that the more information is accessed about individuals and corporate identities, the easier it is for financial and related entities to assist with legitimate businesses.

Daniel Wager argues that increased transparency would help improve trust in financial services; something that is critical to an industry which relies on public confidence to operate.

On today’s episode of the Taxgirl podcast, Kelly is joined by Daniel Wager to chat about fighting financial crime, increasing transparency, and ownership registries. Daniel is the Vice President of Financial Crime Compliance at LexisNexis Risk Solutions. He has extensive experience in developing and running programs designed to prevent, detect and report money laundering, sanctions violations, arms proliferation and other crimes. In his current position, he assists regulated and non-regulated entities in avoiding legal, regulatory and reputational risk, while protecting the global financial system from illicit fund flows.

Listen to Kelly and Daniel talk about increased financial transparency:

What led up to the “clamor” for increased transparency in the wake of the Panama Papers, and how do they differ from the similarly notorious Pandora Papers?
The average taxpayer can be understandably confused about where the line is drawn when it comes to illicit financial activity. Kelly says it’s easy for some to conflate certain activity with wrongdoing, especially among politicians and wealthy individuals with offshore accounts.
How much transparency does Daniel think is healthy or necessary, and should the rules be universal for all taxpayers? From corporations to individuals, Daniel breaks down his vision piece by piece.
Does Daniel think financial transparency is most effective with widespread global reach, or can it still be impactful on an a la carte basis?
What does Daniel say to folks who are fearful about the tax system in the US being unsafe or at risk of exposing sensitive information? Does he believe it’s a protected and private system?
The purpose of these registries is not necessarily to “ferret out” the wrongdoers, but to make compliance and protection more streamlined and accessible for the good guys. Daniel describes this as “reducing friction.”
How do you decide whether an entity is “good” or “bad” in the world of financial compliance? What are the rules, where are the lines? What kind of due diligence does Daniel go through during an investigation?
It’s widely assumed that these registries are meant to catch and prevent purely financial crimes, but financial crimes spread and infect many other aspects of society as well. How does Daniel’s work intersect the IRS and the justice system? In Daniel’s words, “Financial crime is not just one thing.”
As we move forward in a world of increased financial transparency, what obstacles does Daniel anticipate and what advice does he offer to advisers and individuals? The rollout of US registries will take years, but the windup and tension has already begun.

More about Kelly:

You can find out more about Kelly here and you can follow her on Twitter, Facebook, Instagram, and Linkedin.

To subscribe to the podcast (it's free!) using Apple, Spotify, or your favorite listening app, click here.

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75: Sin Tax Scandal? The Hidden Underbelly of these Buzzy Excise Taxes

Do we legalize certain activities and substances just so we can tax them? What’s the intention behind sin taxes, and are they really working as intended?

Listen to Kelly and Thomas talk about the consequences of sin taxes:

More about Kelly:

Links:

Do we legalize certain activities and substances just so we can tax them? What’s the intention behind sin taxes, and are they really working as intended?

Listen to Kelly and Thomas talk about the consequences of sin taxes:

More about Kelly:

Links:

Previous Episode

74: Working Moms & Parents Finding New Support Systems Post-Pandemic

Professional networking groups like All Before Dinner can be a great resource and support network for working parents.

Listen to Kelly and Lisa talk about professional networking as a working mom:

More about Kelly:

Next Episode

76: Busting Financial Crime via Increased Transparency after Panama Papers

Daniel Wager argues that increased transparency would help improve trust in financial services; something that is critical to an industry which relies on public confidence to operate.

Listen to Kelly and Daniel talk about increased financial transparency:

More about Kelly:

Links:

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